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Abbvie Decides to Acquire Allergan

For the second consecutive day, we see another major acquisition during the pre-market period. Yesterday was the Gaming industry’s buyout of Caesars Entertainment CZR by Eldorado Resorts ERI, and today we turn to biopharma: AbbVie ABBV has agreed to purchase Botox maker Allergan AGN for roughly $63 billion in cash and stock.

The deal reportedly values Allergan at a 45% premium to Monday’s closing price. Thus far, since the deal has been announced, shares of Allergan have blossomed 32%. AbbVie, on a quest to replace coming lost revenues on Humira’s generic competition, have dipped around 7.5% thus far ahead of the opening bell.

Allergan has been a targeted acquisition for the past several years — back in 2015, Pfizer PFE, which recently acquired Array Biopharma ARRY, was prepared to pay almost double this morning’s headline price for Allergan. AbbVie, which spun off from Abbott Labs ABT 6 years ago, had been rated a Zacks Rank #2 (Buy) ahead of the announced transaction; Allergan was carrying a Zacks Rank #3 (Hold).

Trump-Xi to Meet This Weekend

As the leaders of the world’s top economies join together for the G-20 summit in Osaka, Japan at the end of this week, President Trump and Xi have scheduled a separate, private meeting between the embattled two leaders. The ongoing trade war, having been put into effect as of fall last year, has shown little progress over the last month, when talks nearing a deal fell apart.

U.S. Commerce Secretary Wilbur Ross does not want investors to get their hopes up that a trade deal is coming soon, certainly not as a direct result of this Saturday’s scheduled meeting between Trump and Xi. What investors might more reasonably expect in the near term is a pause in tariffs and a resuming of talks between the two sides over the summer.

At the G-20 summit last year in Argentina, Trump and Xi also met privately. Routinely, reports from inside these private talks are very positive, but now a year on with no trade agreement in sight, investors have understandably tempered their expectations.

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Caesars Entertainment Corporation (CZR): Free Stock Analysis Report
Allergan plc (AGN): Free Stock Analysis Report
AbbVie Inc. (ABBV): Free Stock Analysis Report
Abbott Laboratories (ABT): Free Stock Analysis Report
Pfizer Inc. (PFE): Free Stock Analysis Report
Eldorado Resorts, Inc. (ERI): Free Stock Analysis Report
Array BioPharma Inc. (ARRY): Free Stock Analysis Report
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